Getting Rich Is Simple

Harry Domash presents an overview of attaining $1,000,000. (I wouldn’t exactly call $1,000,000 in assets or net worth rich, but perhaps that has more to do with location.)

Breaking it down, discipline is the most important aspect of getting there. Invest $500 each month and you’ll be on your way, thanks to compounding interest. The other two aspects according to the article are time and income, two things most people have.

If you count yourself a member of the “I want it now” generation, the idea of waiting 20 or 30 years to get rich probably sounds like a dumb idea… For the vast majority of us, wealth creation is a slow and steady — and powerful — process. The tortoise almost always beats the hare.

Slow and steady wins the race… to being a millionaire in the future. What about being rich? I have news for you. Following the technique outlined in the article, you may have $1,000,000, but In 30 years that amount won’t get you far due to the effects of inflation.

Assuming an inflation rate of 3%, having $1,000,000 in 2035 is similar to having $446,269.56 now, according to Tom’s Inflation Calculator. Do you consider someone with $446,269.56 today rich? (I certainly would’t turn away an offer of that amount, but I don’t think I’d be rich after happily accepting the check or unmarked bills and investing the money.)

Great post. I Read MSN Money frequently and have generally enjoyed their articles. Your post made me think of a similar MSN article that gets the time point accross much better about how investing the proceeds of 4 summers of work at age 16 would likely turn into $1,000,000 by retirement: http://moneycentral.msn.com/content/Investing/Startinvesting/P73751.asp

Matt Hartrich - Buffalo, NY

Discipline can solve many problems.

Loi Tran

I like reading Harry Domash’s writing. Saving 500 a month won’t get you rich in the future, but it’s a good start. People just have to save and invest more. Getting rich is simple, but it is not easy.

I don’t like calculations of future returns assuming high rates of returns such as 10%. It’s better to be more conservative and realistic using a 4% real rate of return (6-8% before inflation) instead of 10% because it’s a more conservative and realistic number. Harry Domash’s site is a good source of information. http://www.winninginvesting.com

I completely agree that discipline in saving + restraint in spending is a great way to become a millionaire. It’s a depressing to look at how inflation erodes the value in the future. Sigh.

James

Sometimes I’m skeptical of these sorts of arguements. The assumption is that one can reach a million dollars based on consistent savings and investing and consistent returns on investment. However, the experience of the last few years has shown us that returns will NOT always be consistent, and this the projections that Harry Domash makes may not accurately reflect economic reality.

In fact, its seems to me that people who have a lot of money tend to be more actively involved in its growth, most often by running a successful business or by some other enterprise.

In sum, Harry Domash’s article may be misleading in that it over-simplifies what it actually takes to become a millionaire, which is a lot, a lot of work.

It not the amount of money you have that makes you rich. Its the cashflow and the amount you spend.

if you eat into your principal amount of $1million every month, you may run out money. However, if you’re $1million generates 8k/month and you can live off 90% of that[reinvesting 10% to keep up with inflation], it’ll probably last you a long long time. of course you won’t be super rich on 8k/month but atleast you won’t have to work for a living.

About Luke Landes

Luke Landes founded Consumerism Commentary in 2003 and has been building online communities since 1990. Luke has contributed to PC World Magazine, US News, Forbes, and other publications. Read more about Luke and about Consumerism Commentary.

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